By LISA STIFFLER, P-I REPORTER

Published 10:00 pm, Wednesday, July 23, 2008

Tired of a lack of leadership at the national level, Western leaders are taking charge on curbing climate change by proposing a plan for cutting greenhouse gas emissions.

The Western Climate Initiative -- a coalition of seven states, including Washington and four Canadian provinces -- on Wednesday released a draft strategy to "cap and trade" releases of carbon dioxide and other heat-trapping gases.

"It's a proud day. No states have ever done this before," said Janice Adair, the initiative's chairwoman and special assistant to the director of the Washington Ecology Department. "It's a huge, huge deal that we got this done."

The idea is to set a limit or cap on how much planet-warming pollution is released from states and provinces in the coalition. Then companies and utilities releasing carbon dioxide and other gases must obtain permits for those emissions.

Cleaner, more efficient companies will need fewer permits, and they can sell what they don't need to those with larger emissions.

European nations already have a cap-and-trade system. The Western Climate Initiative is the largest effort of its kind in North America; member states represent approximately 20 percent of the U.S. population. Supporters see the plan as a model for a national strategy once President Bush leaves the White House.

"It's a gigantic step in the right direction," said Eric de Place, a senior researcher with Seattle's Sightline Institute, a liberal think tank. "Even in an imperfect form, it's a step in the right direction."

The challenge is in figuring out the details of how the cap-and-trade plan works.

Pollution permits can be auctioned off to the highest bidder, or assigned based on previous emissions. The draft plan doesn't say how many will go to each state, or how they'll be allocated to individual polluters.

Environmentalists prefer an auction, with the proceeds used both for investments in clean energy and help for consumers struggling to pay higher energy bills. Issuing permits based on previous emissions also rewards earlier bad habits, they said.

Another question that needs to be more clearly defined is how emissions from transportation are permitted.

The plan allows for polluters to pay for offsets to compensate for emissions.

That means instead of cutting carbon dioxide by investing in cleaner technology, a company can pay for pollution reductions elsewhere, such as planting trees or turning cow manure into energy.

The proposal allows for 10 percent of emissions to be offset -- an amount considered too high by some.

Other Western Climate Initiative government members are Arizona, California, Montana, New Mexico, Oregon, Utah, British Columbia, Manitoba, Ontario and Quebec.

Fourteen more U.S. and Mexican states and Canadian provinces are officially tracking the process.

The group plans to release a final cap-and-trade plan in September. State lawmakers must approve the strategy before Washington participates. Emissions monitoring would begin in 2010; reporting in 2011.

Companies affected by the cap-and-trade plan would include larger utilities, power companies and energy-intensive industries. Because the initiative is regional and not national, some businesses have expressed worries about being put at an economic disadvantage. Adair, of Ecology, said they've tried to include provisions to soften financial costs and believes, in the long run, businesses here will benefit.

"There will be federal constraints on carbon," she said. Companies here, "they'll know how to do this. They'll be smoking ahead of Idaho and other states that haven't participated."